A big fight is shaping up in Congress over the tax treatment of employer sponsored health insurance. An article in The Washington Post discussed Ways & Means Chairman Bill Thomas&#39; (R-CA) ideas on moving the Social Security debate forward. He is impatient with waiting for the Senate Finance Committee to move on the issue so he &quot;announced he would draft legislation in early June that would enlarge the bill considerably to include a grab bag of popular retirement savings provisions and tax incentives,&quot; according to the Post. The article says, among other things, the bill would &quot;bolster traditional corporate pensions,&quot; allow FSA rollovers &quot;to finance chronic health problems of the elderly,&quot; expand IRAs and 401(k) plans, and &quot;reduce or eliminate the exclusion from taxes of employer provided health-care benefits.&quot; The article discusses in detail the politics of these and other provisions and suggests that, while some groups may not like one or two of the provisions, there is broad and bipartisan support for a lot of the agenda, possibly enough to overcome the critics. SOURCE: www.washingtonpost.com

Not So Fast, Mr. Chairman

Neil Trautwein of the National Association of Manufacturers (NAM) weighs in with his concerns. In his (more or less) weekly newsletter he concedes that the tax treatment of employer sponsored coverage may be &quot;antiquated and…less than totally efficient health policy,&quot; but he says the business deduction and the employee exclusion are the two pillars that &quot;are at the heart of health coverage for millions of Americans.&quot; He says companies are already concerned about the declining take-up rate of health coverage by employees and &quot;if the perceived cost of that coverage [to workers] increases…Many will bolt, healthiest first, leaving less healthy individuals in employer-sponsored plans.&quot; He compares this to the death spiral of coverage those states with community rating are suffering. SOURCE: If you do not already get Neil&#39;s fine (and entertaining) newsletter, you are missing a rare treat. You may request inclusion by sending him an e-mail at NTrautwein@nam.org.

Ain&#39;t Competition Grand?

I&#39;ve given several speeches in the Pittsburgh area in the past year. Every time people come up to me afterwards and say, &quot;That all sounds great, but ya know, Pittsburgh is way behind the rest of the country. It will take us 5 – 6 years to catch up.&quot; An article in the Pittsburgh Tribune-Review explains why this might be. It says, &quot;Since the late 1940s, Western Pennsylvania has been known in health insurance circles as &#39;Blue&#39; country,&quot; meaning the market has been dominated by what is now known as Highmark Blue Cross Blue Shield. Competitors have come in and left again, but the Blues were never really challenged in the region. As a result, the article says, nearby Ohio with a very competitive market has lower premiums. Now United Healthcare is entering the market and &quot;has been talking like an organization with very deep pockets (it is), willing to cut price to take market share.&quot; Other companies are also entering the market, and the article says there are &quot;now six major insurers aggressively pursuing business in a shrinking population.&quot; As a result of this new competition, one local consultant is quoted as saying, &quot;Highmark already is pricing its services aggressively.&quot; SOURCE: www.pittsburghlive.com

HighMark Offers HSAs in Individual Market

One consequence of this new competition is a press release by Highmark announcing it will begin offering an HSA-compatible policy in the individual market this month. Premiums will vary by age, gender, and use of tobacco. A non-smoking male between the ages of 35 and 39 would pay $86.70/month. The company is teaming up with PFPC to administer the &quot;BlueAccount&quot; HSA. SOURCE: Contact Denise Grabner at denise.grabner@highmark.com or go to the company&#39;s web site at www.highmark.com

Half a Billion Bucks in HSAs

Inside Consumer-Directed Care reports that HSA administrators now are holding $460 million in deposits. The newsletter interviewed 21 financial firms, including JPMorganChase, Mellon Financial, Exante Bank and Wells Fargo, to arrive at the number. The largest is HSA Bank with 110,000 accounts and $200 million in assets. Collectively, the firms have opened 425,000 HSAs since January 1, 2004 and open 50,000 more every month. The companies expect the numbers to boom on 1/1/06 when new corporate benefits programs become active. SOURCE: www.aishealth.com

Can Consumers Do It?

The growth of HSAs has inspired a surge of innovation in information services; writing in Business First of Buffalo, Annemarie Franczyk explores whether consumers are capable of using that information. She quotes Dr. Abbie Leibowitz, founder of Health Advocate Inc., as saying, &quot;The typical consumer isn&#39;t going to be able to access enough health care information to ever make them a truly informed consumer.&quot; And Barry Schwartz, a professor at Swarthmore College says, &quot;You&#39;re asking more from people than they are capable of or are willing to do.&quot; On the other hand, Bruce Boissonnault, president of the Niagara Health Quality Coalition, has been measuring hospital quality for seven years and has made the information available at www.myhealthfinder.com. He reports that, for the first time, all of the area&#39;s hospitals met or exceeded national standards, and &quot;public disclosure of data was key in that achievement.&quot; He adds, &quot;It&#39;s patients and families that determine quality. All we can do is give them the tools that seem rational to consider.&quot; SOURCE: www.bizjournals.com

Dying in the Streets?

A recent exchange of e-mails went around with the subject head, &quot;Dying in the Streets.&quot; Some Europeans made that claim about Americans without health insurance. They can be forgiven for having that impression, since the impression is based on a report by our own once-prestigious Institute of Medicine (IOM), and has been picked up as a fundamental truth by members of the press and think tanks. The Kaiser Family Foundation, for instance, reports, &quot;The Institute of Medicine in its analysis of the consequences of lack of insurance estimates that 18,000 Americans die prematurely each year due to the effects of lack of health insurance coverage.&quot; Wow! That&#39;s powerful stuff – 18,000 dying every year!! Fortunately, it isn&#39;t true – or at best is very speculative.

IOM&#39;s study was a review of existing literature that generally found people with (private) health insurance received more services and were in better health than those without health insurance. Let us hope that is true – why would people spend all that money for health insurance if they could get the same care for free? But very few of the studies IOM reviewed adjusted for income. There is research aplenty showing that lower-income people are in poorer health and get less health care than higher-income people – regardless of the insurance they have. Countries with universal health care have the same income disparities as Americans do. As it happens, poorer people in the United States are also more likely to be uninsured. That does not mean their lack of insurance is the cause of their poor health. I did a short paper on this a few years ago for the NCPA. I thought it was out-of-date, but it may be worth revisiting whenever the specter of 18,000 dead Americans rears its head. SOURCES: The critique of the IOM study is at — www.ncpa.orgThe KFF paper quoted above is at —www.kff.org

More Appreciation for Roy Ramthun

Several readers wanted to add their own thoughts to the appreciation I wrote last week —

Congratulations, Roy! This is a well deserved move.I am confident that you will continue to shine the health care reform spotlight on the right targets.Good luck and best wishes.

Joseph Lee PughDiamondhead, MS ——————————-

Dear Roy:

As a long time advocate of Consumer Directed Health Care solutions, such as Health Savings Accounts, I have been amazed by the rapid development of the necessary regulatory infrastructure as well as the quality and speed of communicating the new information to businesses and the public. It is clear that the looming crisis in health care (Medicare insolvency and a retiring boomer generation) can only be averted by allowing Americans to begin saving today toward a more secure health care future. Promoting rapid market penetration of health savings accounts is critical, and I am so thankful for the personal efforts of the President and all the others in his administration in this regard. I am indeed thrilled to hear you are moving up, and my only regret might be that those that follow you in your old position will have a very hard time meeting the benchmark you have left.

Big time Congratulations to Roy for the promotion! He was critical during the HSA early days, and he deserves the move to the White House.

Best Wishes,

Kerry SmithCleveland, OH ————————————————–

Thanks for noting Ramthun&#39;s good work. As now retired from 30+ years of practice, I can affirm that Roy et al showed great insight as they developed the HSA policies, etc. Their energy and unusually prompt responsiveness were worthy of high commendation.

If the great potential of HSA&#39;s ultimately comes to fruition, it will in no small part be due to the great effort of Ramthun et al.

Warm regards.

Richard E. Carlson, MDMeridian, ID——————————————–

Roy:

Congratulations on your new position in the White House. It has been terrific corresponding with you over the last several months. I do appreciate your responding to my questions, even though it sometimes took a few weeks. Although time had elapsed, I was not forgotten. You answered every one of my queries.

Consumer Choice Matters is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at www.galen.org for more information.

If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

A big fight is shaping up in Congress over the tax treatment of employer sponsored health insurance. An article in The Washington Post discussed Ways & Means Chairman Bill Thomas' (R-CA) ideas on moving the Social Security debate forward. He is impatient with waiting for the Senate Finance Committee to move on the issue so he "announced he would draft legislation in early June that would enlarge the bill considerably to include a grab bag of popular retirement savings provisions and tax incentives," according to the Post. The article says, among other things, the bill would "bolster traditional corporate pensions," allow FSA rollovers "to finance chronic health problems of the elderly," expand IRAs and 401(k) plans, and "reduce or eliminate the exclusion from taxes of employer provided health-care benefits." The article discusses in detail the politics of these and other provisions and suggests that, while some groups may not like one or two of the provisions, there is broad and bipartisan support for a lot of the agenda, possibly enough to overcome the critics. SOURCE: www.washingtonpost.com

Not So Fast, Mr. Chairman

Neil Trautwein of the National Association of Manufacturers (NAM) weighs in with his concerns. In his (more or less) weekly newsletter he concedes that the tax treatment of employer sponsored coverage may be "antiquated and…less than totally efficient health policy," but he says the business deduction and the employee exclusion are the two pillars that "are at the heart of health coverage for millions of Americans." He says companies are already concerned about the declining take-up rate of health coverage by employees and "if the perceived cost of that coverage [to workers] increases…Many will bolt, healthiest first, leaving less healthy individuals in employer-sponsored plans." He compares this to the death spiral of coverage those states with community rating are suffering. SOURCE: If you do not already get Neil's fine (and entertaining) newsletter, you are missing a rare treat. You may request inclusion by sending him an e-mail at NTrautwein@nam.org.

Ain't Competition Grand?

I've given several speeches in the Pittsburgh area in the past year. Every time people come up to me afterwards and say, "That all sounds great, but ya know, Pittsburgh is way behind the rest of the country. It will take us 5 – 6 years to catch up." An article in the Pittsburgh Tribune-Review explains why this might be. It says, "Since the late 1940s, Western Pennsylvania has been known in health insurance circles as 'Blue' country," meaning the market has been dominated by what is now known as Highmark Blue Cross Blue Shield. Competitors have come in and left again, but the Blues were never really challenged in the region. As a result, the article says, nearby Ohio with a very competitive market has lower premiums. Now United Healthcare is entering the market and "has been talking like an organization with very deep pockets (it is), willing to cut price to take market share." Other companies are also entering the market, and the article says there are "now six major insurers aggressively pursuing business in a shrinking population." As a result of this new competition, one local consultant is quoted as saying, "Highmark already is pricing its services aggressively." SOURCE: www.pittsburghlive.com

HighMark Offers HSAs in Individual Market

One consequence of this new competition is a press release by Highmark announcing it will begin offering an HSA-compatible policy in the individual market this month. Premiums will vary by age, gender, and use of tobacco. A non-smoking male between the ages of 35 and 39 would pay $86.70/month. The company is teaming up with PFPC to administer the "BlueAccount" HSA. SOURCE: Contact Denise Grabner at denise.grabner@highmark.com or go to the company's web site at www.highmark.com

Half a Billion Bucks in HSAs

Inside Consumer-Directed Care reports that HSA administrators now are holding $460 million in deposits. The newsletter interviewed 21 financial firms, including JPMorganChase, Mellon Financial, Exante Bank and Wells Fargo, to arrive at the number. The largest is HSA Bank with 110,000 accounts and $200 million in assets. Collectively, the firms have opened 425,000 HSAs since January 1, 2004 and open 50,000 more every month. The companies expect the numbers to boom on 1/1/06 when new corporate benefits programs become active. SOURCE: www.aishealth.com

Can Consumers Do It?

The growth of HSAs has inspired a surge of innovation in information services; writing in Business First of Buffalo, Annemarie Franczyk explores whether consumers are capable of using that information. She quotes Dr. Abbie Leibowitz, founder of Health Advocate Inc., as saying, "The typical consumer isn't going to be able to access enough health care information to ever make them a truly informed consumer." And Barry Schwartz, a professor at Swarthmore College says, "You're asking more from people than they are capable of or are willing to do." On the other hand, Bruce Boissonnault, president of the Niagara Health Quality Coalition, has been measuring hospital quality for seven years and has made the information available at www.myhealthfinder.com. He reports that, for the first time, all of the area's hospitals met or exceeded national standards, and "public disclosure of data was key in that achievement." He adds, "It's patients and families that determine quality. All we can do is give them the tools that seem rational to consider." SOURCE: www.bizjournals.com

Dying in the Streets?

A recent exchange of e-mails went around with the subject head, "Dying in the Streets." Some Europeans made that claim about Americans without health insurance. They can be forgiven for having that impression, since the impression is based on a report by our own once-prestigious Institute of Medicine (IOM), and has been picked up as a fundamental truth by members of the press and think tanks. The Kaiser Family Foundation, for instance, reports, "The Institute of Medicine in its analysis of the consequences of lack of insurance estimates that 18,000 Americans die prematurely each year due to the effects of lack of health insurance coverage." Wow! That's powerful stuff – 18,000 dying every year!! Fortunately, it isn't true – or at best is very speculative.

IOM's study was a review of existing literature that generally found people with (private) health insurance received more services and were in better health than those without health insurance. Let us hope that is true – why would people spend all that money for health insurance if they could get the same care for free? But very few of the studies IOM reviewed adjusted for income. There is research aplenty showing that lower-income people are in poorer health and get less health care than higher-income people – regardless of the insurance they have. Countries with universal health care have the same income disparities as Americans do. As it happens, poorer people in the United States are also more likely to be uninsured. That does not mean their lack of insurance is the cause of their poor health. I did a short paper on this a few years ago for the NCPA. I thought it was out-of-date, but it may be worth revisiting whenever the specter of 18,000 dead Americans rears its head. SOURCES: The critique of the IOM study is at — www.ncpa.orgThe KFF paper quoted above is at —www.kff.org

More Appreciation for Roy Ramthun

Several readers wanted to add their own thoughts to the appreciation I wrote last week —

Congratulations, Roy! This is a well deserved move.I am confident that you will continue to shine the health care reform spotlight on the right targets.Good luck and best wishes.

Joseph Lee PughDiamondhead, MS ——————————-

Dear Roy:

As a long time advocate of Consumer Directed Health Care solutions, such as Health Savings Accounts, I have been amazed by the rapid development of the necessary regulatory infrastructure as well as the quality and speed of communicating the new information to businesses and the public. It is clear that the looming crisis in health care (Medicare insolvency and a retiring boomer generation) can only be averted by allowing Americans to begin saving today toward a more secure health care future. Promoting rapid market penetration of health savings accounts is critical, and I am so thankful for the personal efforts of the President and all the others in his administration in this regard. I am indeed thrilled to hear you are moving up, and my only regret might be that those that follow you in your old position will have a very hard time meeting the benchmark you have left.

Big time Congratulations to Roy for the promotion! He was critical during the HSA early days, and he deserves the move to the White House.

Best Wishes,

Kerry SmithCleveland, OH ————————————————–

Thanks for noting Ramthun's good work. As now retired from 30+ years of practice, I can affirm that Roy et al showed great insight as they developed the HSA policies, etc. Their energy and unusually prompt responsiveness were worthy of high commendation.

If the great potential of HSA's ultimately comes to fruition, it will in no small part be due to the great effort of Ramthun et al.

Warm regards.

Richard E. Carlson, MDMeridian, ID——————————————–

Roy:

Congratulations on your new position in the White House. It has been terrific corresponding with you over the last several months. I do appreciate your responding to my questions, even though it sometimes took a few weeks. Although time had elapsed, I was not forgotten. You answered every one of my queries.

Consumer Choice Matters is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at www.galen.org for more information.

If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.